The "CLARITY Act" will be reviewed next week; what will be the outcome for the stablecoin "interest payment rights"?

Title: US Senate Committee Set to Consider Long-Awaited Crypto Bill Next Week
Author: Hannah Lang, Reuters

Author: BlockBeats

Source:

Repost: Mars Finance

Editor’s Note: US crypto regulation enters a critical window again. On May 14, the US Senate Banking Committee will review the “CLARITY Act,” a piece of legislation long advocated by the crypto industry that aims to establish a clearer regulatory framework for the US digital asset market. Its core is not just “good news for the crypto industry,” but rather the US is attempting to reintroduce unresolved regulatory disputes from the past few years into Congress’s legislative process.

Specifically, the “CLARITY Act” addresses three main issues.

First, clarifying the regulatory boundaries between the SEC and CFTC over digital assets. Over the past few years, crypto companies have long faced unclear regulatory jurisdiction: whether an asset should be regulated by the SEC as a security or by the CFTC as a commodity often depends on enforcement and case-by-case judgment. If enacted, this bill will define clearer authority boundaries for regulators, reducing the legal uncertainty faced by the industry for a long time.

Second, determining when tokens are classified as securities, commodities, or other categories. This is one of the most core compliance issues in the crypto industry. For project teams, trading platforms, and investors, the nature of the token determines issuance, trading, disclosure, and regulatory responsibilities. The bill attempts to institutionalize classification, providing a more stable legal identity for digital assets and laying a foundation for future product design and market access.

Third, through stablecoin reward provisions, easing conflicts between crypto companies and banks over deposit withdrawals. Under the current compromise plan, users holding idle US dollar stablecoins cannot earn interest-like rewards, as this is considered too similar to bank deposits; however, rewards related to stablecoin use cases such as payments and transfers will still be permitted. In other words, regulators are trying to distinguish whether stablecoins are primarily payment tools or a form of disguised deposit products.

This is also the sharpest point of conflict between the banking sector and the crypto industry. Banks worry that if intermediaries like trading platforms can pay yields to stablecoin holders, funds might flow out of the insured banking system, weakening traditional banks’ deposit base and posing financial stability risks. Crypto companies argue that banning third parties from offering yields around stablecoins essentially protects existing bank interests and limits market competition.

Therefore, the significance of the “CLARITY Act” extends beyond the crypto industry itself. It is not only about token classification and regulator division but also about redrawing the financial boundaries among banks, trading platforms, stablecoin issuers, and payment platforms: Can stablecoins resemble bank deposits more? How deeply can crypto companies penetrate payment and savings scenarios? Can traditional banks continue to monopolize the “USD balance interest” rights?

Next, whether the bill can garner enough support from Democratic senators will determine if US crypto regulation can move from years of stalemate to actual implementation. The most noteworthy aspect is not whether the “CLARITY Act” is simply “crypto-friendly,” but that the US is integrating stablecoins and digital assets into the core issues of financial infrastructure competition. Once regulatory boundaries are set, the future distribution of benefits between crypto companies and traditional banks will also be rewritten.

Below is the original text:

US senators are expected to review a long-awaited piece of legislation next week. The bill will establish a regulatory framework for cryptocurrencies and could break the deadlock surrounding it. This deadlock has at times pitted crypto companies against the US banking industry.

If the “CLARITY Act” is ultimately signed into law, it will clarify the jurisdiction of financial regulators over this rapidly growing industry and could further promote the adoption of digital assets.

Senator Tim Scott, chairman of the US Senate Banking Committee, said on Friday that the committee will hold an executive session at 10:30 a.m. on May 14 (2:30 p.m. GMT) at the Dirksen Senate Office Building in Washington, D.C.

The crypto industry has been pushing for this legislation, claiming it concerns the future of US digital assets and is necessary to address core issues that have long troubled crypto companies. Among other things, the bill will define under what circumstances crypto tokens are securities, commodities, or other categories, providing legal certainty for the industry.

The bill also includes a provision aimed at resolving a fierce dispute between crypto companies and banks. According to a compromise brokered by Republican Senator Thom Tillis and Democratic Senator Angela Alsobrooks, rewards for holding idle USD-backed crypto tokens (i.e., stablecoins) will be prohibited, as such arrangements are considered too similar to bank deposits.

However, other activities related to stablecoins, such as payments and transfers, will be permitted. Banking trade organizations oppose this arrangement, arguing it gives crypto companies too much operational leeway and could lead to deposits flowing out of the regulated banking system.

Ahead of the hearing, the banking industry is mounting a final effort to sway some Republican senators in the Senate Banking Committee, but it is unclear whether they will succeed.

Bank lobbying groups have long sought to amend the “CLARITY Act” to close a “loophole” created by legislation signed into law last year. That loophole allows intermediaries to pay interest on stablecoins. Banks argue this could lead to deposits leaving insured banks and threaten financial stability.

Crypto companies argue that banning third-party interest payments on stablecoins would constitute anti-competitive behavior.

The crypto industry hopes the “CLARITY Act” can be passed within the next few months, before the midterm elections in November, when Democrats might regain control of the House of Representatives.

The House passed its version of the “CLARITY Act” last July, but the Senate needs to pass the bill by the end of 2026 to send it to President Donald Trump for signing.

Many Democratic members of Congress have opposed the bill, citing insufficient anti-money laundering provisions and calling for more measures to prevent political officials from profiting from crypto projects.

To pass the bill in the full Senate, at least seven Democratic senators’ support is required.

President Trump has actively sought crypto industry funding and promised to be a “crypto president.” Meanwhile, his family’s own crypto ventures have further propelled the industry into mainstream awareness.